BofA Merrill Lynch economist optimistic about soft landing of global economy
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E-mail Xinhua, February 15, 2019
NEW YORK, Feb. 14 (Xinhua) -- The world economy is likely to see a soft landing amid measured slowdown of major economies, according to Ethan Harris, head of global economics research with international investment service provider Bank of America (BofA) Merrill Lynch.
Speaking at a press briefing by Bank of America Merrill Lynch on Feb. 13, Harris said he is relatively optimistic about a global soft landing as the world economy is in the third slowdown during the current expansion cycle.
Global purchasing manager indexes (PMI) with manufacturing and services are in a downturn following previous slowdowns in 2012 and 2015, according to a chart shown by the investment bank.
"There's a general weakening growth. But It's not a recession," said Harris.
U.S. economic expansion is not in the late cycle yet as inflation continues to stay muted, said Harris. He noted that U.S. fiscal policy just turns to neutral from easy and the financial situation is tightening from being very easy to slightly ease.
Harris said China is expected to have a soft landing and Chinese economic indicators monitored by the bank should start to stabilize in the second quarter of 2019 when the financial conditions would be able to offer enough support.
China's economy is still in a weakening phase and the government is expected to continue to roll out stimulus measures, according to Bank of America Merrill Lynch.
There has been too much emphasis on recession risks in recent months amid early deep equity market correction, said Harris.
Global economy would grow 3.4 percent in 2019 and rebound to 3.6 percent in 2020 following stronger growth in the previous two years, according to the bank.
Harris noted that the biggest risk facing U.S. economy is inflation and the economic expansion cycle would get old if inflation goes up and the Federal Reserve steps in.
Additionally, the U.S. economy would probably experience a mini recession if debt ceiling fails to be lifted later this year and U.S. federal government enters another shutdown for more than a few weeks, said Harris.
The U.S. economy would grow 2.5 percent in 2019 and 1.8 percent in 2020, respectively, in comparison with estimated expansion of 2.9 percent in 2018, according to Bank of America Merrill Lynch. Enditem
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